Instructions For Form 1 - Massachusetts Resident Income Tax

2006 Form 1 — Line by Line Instructions

Line 2e: Other: Medical/Dental Expenses

Massachusetts Legal Residents Working

What pensions are exempt?

◗ Pension income received from a contributory

and Adoption Agency Fee

in a Foreign Country

annuity, pension, endowment or retirement fund

You may claim an exemption for medical and den-

Income earned by a Massachusetts resident in a

of the U.S. Government or the Commonwealth of

tal expenses paid during 2006 only if you itemized

foreign country is subject to taxation in Massachu-

Massachusetts and its political subdivisions.

these expenses on your U.S. Form 1040, Sched-

setts. If you excluded part or all of the compensa-

◗ Pensions from other states or its political subdi-

ule A. If you are married filing a joint U.S. Form

tion earned in a foreign country on your U.S. return

visions which do not tax such income from Mass-

1040, you must file a joint Massachusetts Form 1

(under Section 911 of the U.S. IRC), you must in-

achusetts or its political subdivisions may be

to claim this exemption. Enter in line 2e, item 1 the

clude any such amount in line 3 for Massachusetts

eligible to be deducted from Massachusetts taxable

amount reported on your U.S. Form 1040, Sched-

tax purposes.

income. This pension income, however, should be

ule A, line 4.

State or Local Employees Contributing to

reported in line 4. Refer to Schedule Y, line 13 in-

Note: Same-sex joint filers should recalculate their

Pension Plans

structions to determine eligibility for this deduction.

U.S. Form 1040, Schedule A by combining allow-

If you are a Massachusetts state, city, town or

◗ Noncontributory pension income or survivorship

able expenses as reported on U.S. Form 1040,

county employee and contributed to your pension

benefits received from the U.S. uniformed services

Schedule A, line 1 and their adjusted gross incomes

plan, enter in line 3 the Massachusetts W-2 state

(Army, Navy, Marine Corps, Air Force, Coast Guard,

as reported on U.S. Form 1040, Schedule A, line 2

wage amount. This is generally box 16 of Form

commissioned corps of the Public Health Service

in calculating U.S. Form 1040, Schedule A, line 4.

W-2. This amount will be higher than the U.S.

and National Oceanic and Atmospheric Adminis-

amount because your pension contributions are

If you paid adoption fees to a licensed adoption

tration) is exempt from taxation in Massachusetts.

excluded from your income for U.S. tax purposes.

agency during 2006, you are eligible for an ex-

◗ Massachusetts state court judges who were ap-

Contributions up to $2,000 per taxpayer may still

emption of the total amount of the fees paid dur-

pointed on or after January 2, 1975 are participants

be deducted in line 11.

ing the year. Fees paid during 2006 to an agency

in the Massachusetts contributory retirement sys-

licensed to place children for adoption on account

tem and their pensions are nontaxable. State court

Line 4. Taxable Pensions and

of the adoption process of a minor child regard-

judges who were appointed prior to January 2,

Annuities

less of whether an adoption actually took place

1975 receive taxable noncontributory pensions.

during 2006 should also be included for this ex-

Income from most private pensions or annuity

If you retired under Chapter 32, Sections 56–60 of

emption. Enter this amount in line 2e, item 2.

plans is taxable in Massachusetts. Certain govern-

Massachusetts General Laws and are a veteran who

ment pensions, however, are exempt under Mass-

Add items 1 and 2 and enter the total in line 2e.

began Massachusetts state service prior to July 1,

achusetts law. In general, exempt pensions include

1939, all or part of your pension income may be

Line 2f: Total Exemptions

contributory pensions from the U.S. Government

subject to tax. If you elected to receive your pro-

Add items 2a through 2e and enter the total in line

or the Commonwealth of Massachusetts and its

ceeds from contributions in one lump-sum distrib-

2f. This amount should also be entered on line 18

political subdivisions, and noncontributory military

ution, your original contributions to the retirement

of Form 1.

pensions. The following section describes some

system are not taxable. Noncontributory pension

specific pensions which are exempt. If your pen-

income received after a lump-sum distribution is

5.3% Income

sion is exempt, enter “0” in line 4 and note the

fully taxable and should be reported in line 4.

source on the dotted line to the left.

Note: DOR and the IRS maintain an extensive ex-

How do I report lump-sum distributions?

If your pension is not exempt, you should generally

change program, routinely sharing computer tapes

If you were an employee of the U.S., Massachusetts

enter in line 4 the taxable amount reported on your

and audit results. Discrepancies between income,

or one of its political subdivisions and left public em-

U.S. Form 1040, line 16b, or U.S. Form 1040A, line

deductions, and schedules reported federally and

ployment prior to retirement, you are not required

12b. In some cases, however, Massachusetts law

on this return, except those allowed under state

to report as income the lump-sum distribution.

requires an adjustment to the federal amount.

law, will be identified and may result in a state audit

Distributions from annuity, stock bonus, pension,

Lump-sum distributions of qualified employee ben-

or further investigation.

profit-sharing or deferred payment plans or con-

efit plans in excess of the employee’s contributions

tracts described in Sections 403(b) and 404 of the

which were previously subject to Massachusetts tax

Line 3. Wages, Salaries, Tips and

U.S. IRC must be adjusted to account for your con-

(or not previously excluded from Massachusetts

Other Employee Compensation

tributions that have been previously taxed. Sub-

tax) must be reported in line 4. Generally, qualified

Report in line 3 total state wages and allocated tips

tract from such income (as reported on your U.S.

rollovers are not taxable in Massachusetts to the

from Form(s) W-2. Income earned by a Massachu-

Form 1040, line 16a, or U.S. Form 1040A, line 12a)

extent they are not taxable on your U.S. return.

setts resident in another state is subject to taxation

the amount of your contributions which was pre-

Lump-sum distributions related to IRA/Keogh and

in Massachusetts. Generally, your total wages and

viously taxed by Massachusetts until the total of

Roth IRA distributions should be reported in line 9.

allocated tips will be the same amount reported on

your taxed contributions is received. If your pen-

Rollover from a traditional IRA to a Roth IRA.

your U.S. 1040 or 1040A, line 7; or 1040EZ, line 1.

sion falls into this category, enter the adjusted

Taxpayers with $100,000 or less in federal adjusted

Following are instances that require an adjustment

amount in line 4. If you are receiving distributions

gross income are allowed to make partial or com-

to these amounts.

from an IRA or Keogh plan, do not report the in-

plete rollovers from existing IRAs to Roth IRAs.

come here; instead, see the instructions for Sched-

Any taxable portion of these rollovers included in

ule X, line 2.

federal gross income is also included in Massachu-

Note: Massachusetts does not tax Social Security

setts gross income, except for amounts previously

income; therefore, you should not report such in-

subject to Massachusetts personal income tax. See

come on Massachusetts Form 1.

Schedule X, line 2 instructions for further details.

Instructions For Form 1 - Massachusetts Resident Income Tax - 2006 Page 10

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